Find out what the measures introduced in Budget 2017 mean for the everyday Singaporean.
Budget 2017 has been announced, and it’s more than just a bunch of handouts. This budget is meant to prepare us for uncertainties in the near future, as the global economy undergoes a dramatic shift. Here are some of the ways the budget could impact you:
1. This Budget is Your Opportunity to Flee Dying Industries
Budget 2015 and 2016 established the SkillsFuture programme to help upgrade your skills. Budget 2017 pumps a whopping S$26 million into the Lifelong Learning Endowment Fund and Skills Development Fund, for the same reason. However, we note a key difference:
This time, it specifies that the training is for workers to enter “emerging sectors that show promise.”
This is a little more targeted than previous budgets (although Budget 2016 also focused on the Infocomm industry). It does mean some of the courses on offer may not be oriented toward your particular industry, especially if your industry is being disrupted by newer ones.
This can mean that, if you’ve worked in construction all your life, the courses on offer seem unrelated (and most will be oriented toward digital industries). This is deliberate – the attempt is not an upgrade “across the board”, but an attempt to move Singaporeans into industries with good growth potential.
On the upside, this makes it easier to flee sunset industries. On the downside, it does mean you have to step out of your comfort zone, and make big changes. You’re not going to be rewarded otherwise.
2. Resale Flats Will be More Affordable
The CPF Housing Grant is now raised for first time resale buyers. The grant is S$50,000 for a four-room or smaller flat, and S$40,000 for larger flats.
This is on the back of already falling property prices. Since the imposition of cooling measures in 2014, Singapore properties are now down almost 11% from the last peak in 2013.
Resale flats are favoured by Singaporeans who, for whatever reason, cannot wait for two years for a BTO flat. It also means Singaporeans have a little more access to mature estates. Most mature estates do not have room for BTO flats, so the only way to get to these built-up areas (Queenstown and Marine Parade, for example) is through buying resale.
3. Some Prices May Go Up
Water prices are going to rise by 30%, for businesses as well as for homes. With regard to your home, the implications are obvious: you’ll need to put in place some rules (such as how long showers can last) if you want to save on water. But let’s look at the business implications.
It’s estimated that 75% of businesses will only see a raise of about S$25 a month. However, that still leaves a full quarter of all Singaporean businesses to potentially face higher costs. Some businesses, such as laundromats, soft drink manufacturers, and restaurants, could see more significant cost increases.
Some of these businesses may try to cope by cutting costs. However, we wouldn’t be surprised if many pass on the costs to consumers. We might, for example, see the price of laundry services go up, or more restaurants charge for water.
On a related note, carbon taxes will be imposed from 2019. This charges businesses S$10 to S$20 per tonne of greenhouse gasses emitted (if they emit any). This is an important step, as Singapore is an island nation – we’ll be the first to suffer if melting ice caps raise the sea level. However, the danger is that businesses will just raise prices, instead of finding more efficient ways to operate. Be prepared to vote with your dollars.
4. Now is Not the Time to Get That Top-end Motorcycle
Fancy a Ducatti or a Harley Davidson? Now may not be the time.
The Additional Registration Fee (ARF) is going up for higher end motorcycles. For bikes with an Open Market Value (OMV) of up to S$5,000, the ARF is 15%. The ARF is 50% for the next $5,000, and 100% for OMVs above S$10,000.
That’s right - the most luxurious motorcycles out there are going to cost literally twice as much!
5. Hand-outs to Cope with Costs
As always, there are some benefits to cope with our rising cost of living. There will be a permanent increase of S$40 to S$120 for various eligible households, in U-Save voucher rebates. It is expected that this amount will rise periodically, to cope with inflation (the rising cost of goods).
A one-time personal income tax rebate, capped at S$500, will be given out this year. Some Singaporeans in need will also receive a one time, S$500 GST voucher. In addition, the conservancy charges for some HDB estates will have their rebates raised (varies by location). We feel these mostly compensate for the rise in water prices, mentioned in point 4.
For Singaporeans on a tight budget, these hand-outs should keep them going for a few months while they try to improve their situation. For middle-class Singaporeans, it’s not a huge deal; but it does pave the way for a little more savings.
6. More Support for Mental Health, and for Disabilities
The government is expending S$160 million over the next five years, to raise support for mental health.
There is also a budget of S$400 million per year, to help integrate the disabled into our workforce, and support the industry for caregivers.
These two programmes are good for obvious reasons, but we want to highlight an overlooked factor: these contribute positively to business.
Helping to integrate the disabled means expanding a company’s talent pool, and assisting with Singapore’s rather severe labour crunch. In the long run, this makes for more successful businesses, raises the prospects of expansion, and results in higher employment figures.
7. Targeted Help for Small Business
Three important facets of the budget will help small businesses:
The first is an S$80 million Go Digital Programme, to help small companies move into the digital space. This is sorely needed in Singapore, where small businesses often operate on thin margins, and lack the funds to expand into cyberspace.
We look forward to people being able to order supplies from the HDB provision store, right from their phone; or being able to market their family-run brands alongside the giants on Facebook or Twitter. Social media will level the playing field between small, home grown businesses and corporate giants.
The other two facets are a S$600 million International Partnership Fund, and a S$100 million infusion into the Global Innovation Alliance and Leadership Development Initiative.
Now, these are a little different from the old Productivity and Innovation (PIC) Grant, in that they are highly targeted. The government is aiming at businesses that can scale up and internationalise. In other words, these funds will help if you want to expand your blogshop into a giant fashion label that’s sold in 50 countries; it’s less useful if you just want new windows for your small corner shop that you don’t plan to grow further.
Now is the time for Singaporeans to start thinking big, and for aspiring entrepreneurs to take the leap.
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